Simon v. Navon

• Decision Date: 07 September 1995
• Docket Number: Nos. 94-1601,94-1602,s. 94-1601
• Parties: Frank SIMON, II, Plaintiff, Appellee, v. Gershon NAVON, Defendant, Appellant. Frank SIMON, II, Plaintiff, Appellee, v. Jonathan NAVON, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 9

71 F.3d 9

Frank SIMON, II, Plaintiff, Appellee, v. Gershon NAVON, Defendant, Appellant.

Frank SIMON, II, Plaintiff, Appellee, v. Jonathan NAVON, Defendant, Appellant.

Nos. 94-1601, 94-1602.

United States Court of Appeals First Circuit.

Heard Sept. 7, 1995.

Decided Nov. 27, 1995.

James D. Poliquin, Portland, ME, for appellants.

C. Donald Briggs, III, with whom Joseph M. Cloutier was on brief, Rockport, ME, for appellee.

Before SELYA, Circuit Judge, COFFIN, Senior Circuit Judge, and BOUDIN, Circuit Judge.

COFFIN, Senior Circuit Judge.

This case arises out of a failed business relationship between the plaintiff, Frank Simon, and defendants, Gershon and Jonathan Navon, the sole owners and officers in Maine Coast Trading Company, a fish brokerage firm. A jury found the Navons liable for breach of contract, defamation and abuse of process, and awarded Simon approximately $3.3 million in compensatory and punitive damages. The district court granted defendants' motion for new trial unless Simon agreed to remit $1.2 million, which he did. The defendants now appeal, claiming a host of errors. After a careful review of the record and caselaw, we affirm the court's rulings on the contract claims, but reverse the judgment on abuse of process and remand for a new trial on defamation.

I. Background

At this juncture, we shall provide only a brief sketch of the facts underlying the case, elaborating in subsequent sections of the opinion as necessary to inform our discussion of specific issues. Maine Coast Trading Company ("Maine Coast Trading" or "MCTC") was formed in November 1990 after Gershon Navon approached Simon about creating a company to broker fish. Navon provided most of the capital to form the business, and he originally received 60 percent of the company's equity. Simon, who had considerable experience in the fish brokerage business, was president of the company and ran its business office in Wiscasset, Maine. A smaller office at Gershon Navon's home in Connecticut primarily handled checking account and line of credit matters. Jonathan Navon, Gershon's son, was treasurer.

Maine Coast Trading entered into two significant brokerage agreements, one with a company in which Gershon Navon was the sole shareholder (Mariculture Products, Ltd., "Mariculture"), and one with a company in which Simon had a lesser interest (Aquacorporacion Internacional Sociedad Anonima, "ACI"). Although Maine Coast Trading apparently operated smoothly through 1991, the Navons and Simon early in 1992 were discussing ways to wind down the company's affairs. On March 24, 1992, the parties signed a letter agreement that addressed issues that had arisen between them in the preceding months, outlining the future handling of MCTC business.

The agreement did not resolve matters, however, and the parties' relationship grew even more acrimonious. Disagreements arose over which vendors should be paid what amounts and how much money was available in the company's account at Israel Discount Bank in New York. The ensuing events, most of which occurred between April and June of 1992 but whose sequence is in some cases disputed, included:

--Simon began holding Maine Coast Trading's receivables in Wiscasset, contrary to the letter agreement's provision that he send those funds "directly to IDB with no delay";

--Jonathan Navon issued a check in the amount of $36,000 as accumulated salary to himself, and a $9,000 check to Mariculture, Gershon Navon's other company, for office rent and expenses. He did not seek Simon's approval for these expenditures, as required by the letter agreement. No previous payments for such items ever had been made;

--Simon opened a checking account at Camden National Bank in Maine, deposited accumulated receivables of $68,000, and immediately wired the entire sum to ACI, the company in which he had an interest. Over the next few weeks, other receivables collected by Simon were deposited in this account and checks were issued to various vendors;

--Israel Discount Bank froze Maine Coast Trading's account at Simon's request;

--At a telephonic meeting of MCTC's board of directors, convened by an attorney in Portland, Maine, the Navons voted to remove Simon as president and elected Gershon to replace him. Simon initially participated in the telephone call, but complained about lack of notice and hung up before the vote;

--Several litigations were initiated: ACI filed a civil action against Maine Coast Trading in state court in Maine; an involuntary petition for bankruptcy, signed by Simon as ACI's representative, was filed against Maine Coast Trading; Maine Coast Trading (through the Navons) sued Israel Discount Bank in New York for freezing its account, and later added Simon as a defendant, increasing the damages request from $87,000 (the amount of funds in the account) to $30 million.

Simon filed this lawsuit in October 1992, alleging breach of contract, defamation, negligent and intentional infliction of emotional distress, tortious interference with contract and malicious prosecution. The district court granted summary judgment for defendants on the tortious interference claim, and granted judgment as a matter of law on the claims for negligent and intentional infliction of distress. At the close of all evidence, the court recharacterized the malicious prosecution claim as a claim for abuse of process. The jury found both Navons liable on each of the three remaining claims--breach of contract, defamation and abuse of process--and awarded a total of $2.3 million in compensatory damages and punitive damages of $1 million against Gershon and $36,000 against Jonathan.

In acting on defendants' post-judgment motions, the district court found the $2.3 million in compensatory damages "clearly excessive and against the weight of the evidence," and ordered a new trial if Simon failed to accept a remittitur of $1.2 million. He agreed to the remittitur, and this appeal by the Navons followed. They claim entitlement to judgment or a new trial on each of the substantive claims, as well as on damages. They further argue that they are entitled to a new trial on all issues based on a series of circumstances that infected the jury's verdict with undue passion or prejudice.

We address each of these issues in turn, after briefly considering the relevant standards of review.

II. Standard of Review

The district court rejected the Navons' post-trial motion for judgment as a matter of law because they failed to make that request at the close of all evidence, thus forfeiting the right to such a determination. See Keisling v. SER-Jobs for Progress, Inc., 19 F.3d 755, 758-59 (1st Cir.1994); Della Grotta v. Rhode Island, 781 F.2d 343, 349 (1st Cir.1986); Fed.R.Civ.P. 50(b). Once abandoned, a claim for judgment as a matter of law may not be revived on appeal except upon a showing of plain error resulting in a manifest miscarriage of justice. Shell v. Missouri Pac. R.R. Co., 684 F.2d 537, 540 (8th Cir.1982); Martinez Moll v. Levitt & Sons of Puerto Rico, Inc., 583 F.2d 565, 570 (1st Cir.1978).

The court did reach the merits of defendants' alternative request for a new trial, which may be granted notwithstanding the failure to make a pre-deliberations request for judgment as a matter of law. See Wells Real Estate v. Greater Lowell Bd. of Realtors, 850 F.2d 803, 810 (1st Cir.1988); Fed.R.Civ.P. 59; 9A C.A. Wright & A. Miller, Federal Practice and Procedure Sec. 2539, at 362 (1995). The court denied a new trial on the substantive claims, but, as noted earlier, granted a new trial on damages contingent on the remittitur. Defendants now challenge the court's refusal to further disturb the jury's verdict. Our review, however, is extremely circumscribed; we may reverse the court's decision only for an abuse of discretion. Sanchez v. Puerto Rico Oil Co., 37 F.3d 712, 717 (1st Cir.1994). With this limitation in mind, we turn to appellant's claims of error.

III. Malicious Prosecution and Abuse of Process

In his complaint, Simon alleged a cause of action for malicious prosecution based on the lawsuit filed by the Navons in New York in the name of Maine Coast Trading. That action, first brought against Israel Discount Bank to obtain release of $87,000 frozen in the company's account, later was amended to include a claim against Simon seeking $30 million in damages and injunctive relief. Twice during the trial, the parties and the district court displayed confusion about the malicious prosecution claim and its elements, and considered whether the claim would be more aptly characterized as one for a related tort, abuse of process. Ultimately, over the defendants' objection, the court amended the pleadings to substitute abuse of process for the malicious prosecution count, and the jury returned a verdict for Simon on that claim. ¹

The Navons argue that the district court's handling of this issue was erroneous in two respects. First, they claim that amendment of the pleadings after the close of evidence was unfairly prejudicial because their strategy was based on the assumption that Simon would be unable to prove a necessary element of malicious prosecution, namely, that the challenged litigation had terminated in his favor. ² Second, they claim that Simon failed as a matter of law to prove the elements of abuse of process.

We address only this latter claim. Preliminarily, however, we must determine whether, unlike other grounds asserted in the post-trial motion for judgment as a matter of law, the issue was preserved by timely request at the close of evidence. The parties' final discussion with the court on the malicious prosecution claim occurred during a chambers conference after the close of all the evidence. The conference, focusing on the difference between claims for malicious prosecution and abuse of process, occupied seven pages of transcript. The court concluded the conference with the following statements:

I think it's a very, very thin...